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IBERIAN DAILY 06 MAY + 1Q’21 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ARCELOR MITTAL, CAIXABANK, ENDESA.

At the end of today’s report, and during the entire results season, we will include a presentation with positive and negative results highlights and previews for the 1Q’21 results to be released over the coming days in Spain.

MARKETS YESTERDAY AND TODAY

Sharp rises in the European stock markets
The good vaccination pace in the US and the earnings season fuelled gains in European stock markets once more. Thus, the Euro STOXX climbed almost +2.0%, with value seeing the highest gains through Basic Resources and Energy vs. Real Estate, while Pharma ended with the lowest rises. On the macroeconomic level, in the euro zone, April’s final Services PMI was raised thanks to the better performance of Spain (up to 54.6 from 50), which would underpin the 12.6% YoY 2Q’21 GDP growth expected by the consensus. In the US, ADP private employment recovered in April less than expected. On another note, the non-manufacturing ISM fell unexpectedly. From the Fed, C. Evans does not expect inflation to soar over the coming months despite the sharp increase in government spending. Lastly, Biden backed suspending patents on Covid-19 vaccines. In Brazil, the Central Bank raised the Selic interest rate by 75bps to 3.5%, leaving the door open to further increases to contain the BRL. In US business results, WestRock and Hilton released disappointing results, whereas General Motors, Pinnacle, Fox and PayPal, among others, beat expectations.
What we expect for today
The European stock markets would see a flat performance throughout the session. Currently, S&P futures are up +0.1% (the S&P 500 ended down -0.46% vs. its price at the closing bell in Europe). Volatility in the US dropped (VIX 19.15). The main Asian markets are trading with mixed results (China’s CSI -1.2% and Japan’s Nikkei +1.6%).
Today in Germany we will learn March’s factory orders, in the euro zone the ECB monthly report and March’s retail sales. In the UK, the BoE will hold its interest rate meeting. In the US we will also learn weekly jobless claims and the 1Q’21 non-farm productivity. In US business results, Linde, Kellogg, Motorola and News Corp, among others, will release their earnings. As for auctions, Spain will issue € 5.5 Bn in bonds due 2026, 2030, 2031 and 2050 and France € 11.5 Bn in bonds due 2031, 2040 and 2052.


COMPANY NEWS

ARCELOR MITTAL. Results clearly above expectations. BUY.
Results came in clearly better than expected, with EBITDA growing +235.3% vs. 1Q’20 (vs. +172.0% BS(e) and +206.6% consensus) with Brazil (23% EBITDA), Europe (22%) and Mining standing out (42%). Furthermore, the outlook remains positive, MTS continues to stress a balanced supply and demand environment, with low inventories and expecting apparent demand to come in at least at the top end of the guidance made public in February (+4.5%/+5.5%). This, along with the results released today, lead us to believe that despite the good share price performance in 2021 (+24.6% vs. IBEX35), the market will react positively, forecasting upgraded estimates by us and the consensus.

CAIXABANK. 1Q’21 Results slightly worse than expected by the consensus in PPP, better in CoR and overshadowed by BIN.
The 1Q’21 Results were fully in line with our PPP estimates and slightly below those of the consensus (+9.8% vs. 1Q'20 and vs. 11.3% consensus) due to one-off costs (linked to the merger). The CoR saw a positive performance, coming in at 61bps. The bank announced a